Return on capital employed (ROCE) ratio is computed by dividing the net income before interest and tax (EBIT) by capital employed. It measures the success of a business in generating satisfactory profit on capital invested. The ratio is expressed in percentage.Return on capital employed ratio measures the efficiency with which the investment made by shareholders […]
Return on Investment (ROI) also known as Return on assets (ROA). This is a profitability ratio that helps determine how efficiently a company uses its assets. It is calculated divided to PAT (Profit after Tax) by Total Asset. In other words, ROA or ROI is an efficiency metric explaining how efficiently and effectively a company
Working Capital Turnover Ratio is used to determine the relationship between net sales (Total Sale – Sale Return) and working capital of a business. It shows the number of net sales generated for every single unit of working capital employed in the business. Gross Working Capital = Total Current Asset Net Working capital is calculated
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Capital gearing ratio is a useful tool to analyze the capital structure of a company or business and is computed by dividing the common stockholders’ funds by fixed cost bearing funds. Analyzing capital structure means measuring the relationship between the funds provided by common stockholders and the funds provided by those who receive a periodic
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Proprietary ratio shows the total assets of a company which are financed by proprietors’ funds. This ratio is also known as equity ratio. It helps to determine the financial strength of a company & is useful for creditors to assess the ratio of shareholders’ funds employed out of total assets of the company. Proprietors’ funds
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Fixed asset ratio shows the relationship between a company’s long term funds with Fixed asset. Fixed Assets ratio is a type of solvency ratio which is calculated by dividing total fixed assets (net of depreciation) of a company with its long-term funds. It shows the amount of fixed assets being financed by long term funds.
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Debt to asset ratio shows the relationship between a company’s total debt with total asset. The debt to asset ratio measures the percentage of total assets financed. It is computed by dividing the total debt of a company with its total assets. It shows the amount of debt obligation a company has for each unit
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Debt to equity ratio shows the relationship between a company’s total debt with Shareholders Funds. If the purpose of calculating debt to equity ratio is to examine financial solvency of a firm in terms of its ability to avoid financial risk. Formula of Debt to equity ratio? Debt to Equity Ratio = Debt/Equity (Shareholder Funds)
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Inventory turnover ratio or stock turnover ratio indicates the relationship between COGS (Cost of Goods Sold) and Average Stock (Inventory). It indicates how efficiently the company investment in inventories is converted to sales. Stock Turnover Ratio is an activity and efficiency ratio. This ratio helps to determine stock related issues such as overstocking and overvaluation.
Debtor’s turnover ratio is also known as the Trade Receivables Ratio. It is an activity ratio that finds out the relationship between sales and average debtors of the company. It helps in cash planning as cash flow from customers can be computed on the basis of total sales generated by the company. Provision for doubtful
